TORONTO/RIYADH, April 15 (Reuters) - Saudi Arabia’s state-owned agricultural investment firm and U.S. grain trader Bunge Ltd will buy a controlling stake in Canadian grain handler CWB in a bold move by the Gulf state to secure food supplies.

G3 Global Grain Group, a joint venture of Bunge and Saudi Agricultural and Livestock Investment Co (SALIC), said on Wednesday it will buy a 50.1 percent stake in CWB for C$250 million ($201 million).

The remaining stake will be held in trust for Canadian farmers with G3 having an option to buy them out after seven years. Canada owned the CWB, formerly known as the Canadian Wheat Board, until the government stripped it of its Western Canadian grain monopoly in 2012.

Saudi Arabia began scaling back its domestic wheat-growing program in 2008, planning to rely completely on imports by 2016 to save water. SALIC was formed in 2011 by late King Abdullah to secure food supplies for the kingdom, mainly through mass production projects and foreign investment.

“Canada is a major wheat grower and exporter, and Saudi Arabia relies on imports to meet its growing demand for food,” SALIC Chairman Abdullah Al-Rubaian said in a statement, adding G3 would “strengthen grain off-take and export capabilities in Canada”.

In a multibillion-dollar search for food security, Saudi Arabia and other Gulf desert states, which rely on imports for 80 to 90 percent of their food needs, have invested heavily in agricultural projects overseas since 2008.

Canada, the world’s second-largest wheat exporter, shipped 378,000 tonnes of wheat to Saudi Arabia in 2013/14 and 126,500 tonnes of barley, according to the Canadian Grain Commission. In contrast, total Saudi imports in that period were 3.43 million tonnes of wheat and 9 million tonnes of barley, according to the U.S. Department of Agriculture.

USDA expects the kingdom to import around 3.5 million tonnes of wheat in the 2014/2015 marketing year.

Under the deal, Saudi Arabia would still have to compete to buy grain from the CWB at market prices. Saudi Arabia imports wheat through the General Silos and Flour Mills Organisation in public tenders.

FARMERS HAVE MIXED VIEWS

CWB has remained under government control since 2012, while Ottawa sought a majority investor. CWB Chief Executive Ian White said the agreement with G3, which will be based in Winnipeg, Manitoba, secures CWB jobs in Canada. The deal, slated to close by midyear, requires approval by Canada’s Competition Bureau.

The National Farmers Union, one of the loudest critics of the government’s decision to end the Wheat Board’s monopoly, opposes the sale, saying farmers were not consulted.

Norm Hall, president of the Agricultural Producers Association of Saskatchewan, said the possible buyout of farmers after seven years is a concern.

“But there are some positives. It’s a new entrant into the grain industry, which should mean more competition,” he said.

CWB operates seven grain elevators in Western Canada, along with port terminals in Ontario and Quebec, and is building four additional grain-handling facilities. G3 said Bunge’s export terminal in Quebec and four grain elevators in Quebec will be part of the deal.